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Just to clarify for the rest; the borrower (ECB) is literally printing new money every time they give out a loan.
by clownpepe 4y ago
Just to clarify for the rest; the borrower (ECB) is literally printing new money every time they give out a loan.
- karatinversion 4y agoThe ECB is printing money to give out loans to itself?
- StanislavPetrov 4y agoEvery central bank does. If you think the ECB is bad, take a look at Japan. Unfortunately the entire "global financial system" is based on this. But don't call it a ponzi scheme or Serious Economists will tell you why it is totally sustainable.
- afiori 4y agoIt cannot be a Ponzi scheme; if it can print unbounded amount of money there can be no risk f money running out.
- everforward 4y ago"Literally" was probably an exaggeration, but they are in a way. If you deposit $100 with bank A, and they give a loan for $80 to person B, you have $100 to spend and person B has $80, so $180 can float through the economy. The $80 debt should cancel out person B's surplus, but it kind of doesn't if interest rates are low enough because they'll never actually pay it back. That's my potentially poor understanding of it.
- karatinversion 4y agoWhere does the ECB, which doesn’t give loans to individuals, come into it?
- clownpepe 4y agoECB loans out money to certified banks. This loaned money is “printed” or created on their ledger so to speak